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Tuesday, 27 March 2012

Industrial Self Adhesives Ltd v Teknek Ltd and others[2012] EWPCC 10, 8 March 2012, took a look at a variation on a theme that is becoming increasingly common these days -- the question whether the settlement of a case actually finishes it off or whether there is scope for further fiddling around with it. The Chancery Division, England and Wales, recently visited this question in a different context, involving a post-settlement consent order in a trade mark infringement action which was subsequently challenged for, among other things, breach of EU competition law (see IPKat post here). In that case, the strong public interest in the finality of a dispute settlement was emphasised. Industrial Self Adhesives Ltd v Teknek was however exploring a different post-settlement issue: might the Patents County Court for England and Wales amend a patent post-settlement.

In this action, which originated in a claim for unwarranted threats, Judge Birss QC held that the Patents County Court enjoyed the same jurisdiction to deal with post-settlement amendments to a patent as did the Technology and Construction Court itself in Lars Norling v Eez-Away[1997] EWCC 369 (TCC). This did not mean, though, that the court should go ahead and deal with the amendments in every circumstance: there might be circumstances in which the proper course was for the patent owner to apply to the Comptroller instead.

On the facts of the case before Judge Birss, it appeared that the Comptroller had no comments to make; no opponent had come forward following the advertisement of the amendments sought by the patent owner; nor had the claimant in these proceedings objected. There wasn't any apparent controversy and no matter of public interest arose. Accordingly, even though the amendments were more than simply an exercise in amending down to an existing dependent claim, it was appropriate for them to be dealt with immediately in the Patents County Court.

In a 9-0 ruling,
the Court held that Prometheus Laboratories, Inc.’s patents covering methods
for adjusting doses of thiopurine drugs in patients with autoimmune disease
were not patent-eligible. The Court ruled that the physiological relationship
cited in the claims – that thiopurine metabolite concentrations below 230 pmol
per 8x108 red blood cells are ineffective, but concentrations in excess
of 400 pmol per 8x108 red blood cells are toxic – is a “law of
nature.” As a result, the court ruled, a claim directed to a method utilizing
that relationship must be restricted to an application of the relationship, not
the law of nature itself.

Although the
Prometheus patents recited steps of “administering” thiopurine drugs and “determining”
the metabolite concentrations in a patient’s blood, thereby indicating whether
the patient dosage was too high or too law, the Court ruled that the claims
merely covered the law of nature itself. The Court discussed two factors in
determining eligibility: (1) whether the claim recited features, such as
unconventional or non-routine steps or structures, that provide “practical
assurance that the process is more than a drafting effort designed to
monopolize the law of nature itself[;]” and (2) whether the claim would “risk
disproportionately tying up the use of the underlying natural laws[.]” Mayo, at 4, 8-9. The Court ruled that
the steps of administering thiopurine to patents and then determining metabolite
blood concentrations were well-known, routine, and obvious. Thus, they did not
restrict the claim to an application of the underlying laws of nature. In
addition, the Court ruled that the claim would disproportionally preempt
innovation and research in the field, because the only way to exploit the law
of nature (at least in the Court’s eyes) was to practice the steps recited in
the claim.

Although the effect
of this decision will depend on how it is applied by the lower courts,
including the U.S. Court of Appeals for the Federal Circuit, the decision
raises some grave issues concerning the eligibility of process claims,
especially in medical diagnostic process inventions.

First, Court’s
assumption that the precise relationship between metabolite concentration and
effectiveness/toxicity is a law of nature seems suspect. Every scientific or
technical invention will necessarily depend of some physical law. One would
think that laws of nature were broader scientific relationships, such as the
law of gravity, the mechanisms of DNA replication, or laws of physics and
thermodynamics. The specific relationship recited in the Prometheus claims –
including specified thresholds for drug effectiveness and toxicity – would appear
to be an application some laws of physiology, not a law of nature in and of itself.
If the fact that thiopurine metabolite concentrations in excess of 400 pmol per
8x108 red blood cells is toxic is a law of a nature, what scientific
fact would not be a law of nature? In effect, most – if not all- process claims
could be subjected to this standard.

Second, the apparent
requirement that a claim must recite unconventional, non-routine and unobvious
steps or structures in order to be restricted to an “application” of a natural
law seems unsupportable. The Court justified its rule in part on its milestone
decision in Diamond v. Diehr, 450
U.S. 175 (1981). The process invention in Diehr
employed the well-known Arrhenius equation, governing the curing or rubber, and
recited steps of installing uncured rubber into a press, closing the mold,
constantly determining the temperature, constantly recalculating the cure time
using the equation, and opening the press. The Court concluded that those
steps, unlike the steps recited in the Prometheus patents, were not
conventional or routine. But it would appear that the steps would have been
common in the rubber curing art.

Third, the decision
calls into question the Court’s statement in Bilski that the “Machine or Transformation” test is “a
useful and important clue, an investigative tool, for determining whether some
claimed inventions are [eligible] processes under § 101[.]” Bilski, 130 S.Ct. at 3227. The Federal
Circuit had held that since the thiopurine metabolites resulted from chemical
transformations in the patient’s blood, the test was satisfied. The Court
ruled, however, that the test was not dispositive: “Regardless, in stating that
the ‘machine-or-transformation’ test is an ‘important and useful clue’ to
patentability, we have neither said nor implied that the test trumps the ‘law
of nature’ exclusion. That being so, the test fails here.” Mayo, at 19.

In light of these and other difficulties, it is likely that
the Mayo decision will signal a
general bias toward avoiding patents that claim natural laws as such, rather
than establishing specific legal standards. Indeed, the Court expressly avoided
stating exactly how much unconventional and non-routine activity was required
to avoid claiming a law of nature itself. Mayo,
at 18. That omission leaves the Federal Circuit a great deal of leeway in
fashioning a more workable rule in later cases.

Thursday, 22 March 2012

In the decision relating to the merger between Google and Motorola Mobility, the EU commissioner for competition Jaquin ALMUNIA expresses some interesting thoughts on the role of standard relevant patents (SRP) in the context of the EU antitrust regulations (Art. 102 TFEU).

Finally, Google contends that in relation to Motorola Mobility's SEPs, a potential
licensee will have the opportunity to prevent an injunction from being sought, even
after good faith negotiations have failed, provided that a potential licensee (a) makes
an offer to license Motorola Mobility's SEPs, subject tocertain conditions, and (b)
provides securities with regard to the royalty payments.

And in item 106:

In the event licensing discussions fail, the SEP holder may ultimately take its counterparty to court and seek an injunction.

Florian Müller on FOSS argues that this might bee seen as a further requirement that licensing discussions must have taken place and have failed before an injunction is granted.

Similar thoughts are expressed in item 126:

it may be legitimate for the holder of SEPs to seek an injunction against a potential licensee which is not willing to negotiate in good faith on FRAND terms.

In a footnote, the commpssion points to the Case T-111/96 ITT Promedia v Commission [1998] ECR II-2937) and argues that in that case,

the ECJ acknowledged that the fundamental right to property, which includes the rights linked to intellectual property, is not absolutely protected but must be balanced against the protection of other fundamental rights such as the freedom to conduct business. (See Case C-70/10 Scarlet Extended, judgment of 24 November 2011, paragraphs 41 to 46).

However, the commision emphasizes that the commitment to the Orange Book-Conditions is by no means a guarantee that Art. 102 TFEU is respected and reminds that the sword of Damocles of a commission investigation is always hanging over the holder of a SEP trying to enforce his right (item 132):

Given this context, the Commission considers that Google's incentives to use the threat of injunctions to forcibly extract cross-licences from good faith licensees are most likely be constrained by the prospect of an investigation based on Article 102 TFEU.

Monday, 12 March 2012

In a recent decision, two judges on the U.S. Court of
Appeals for the Federal Circuit voiced sharp disagreement about the role of the
question of patent eligibility, 35 U.S.C. § 101, in lawsuits presenting challenges to the validity of
issued patents.

In MySpace, Inc. v.
GraphOn Corp., Case No. 2011-1149 (Fed. Cir. Mar. 2, 2012), the court
affirmed a district court summary judgment that the four patents in suit,
including U.S. Patent No. 6,324,538 (entitled “Automated on-line information
service and directory, particularly for the World Wide Web”), were invalid as
lacking novelty and obvious. In a dissenting opinion, Circuit Judge Haldane
Robert Mayer argued that the claimed invention was invalid as an ineligible “abstract
idea.” See Bilski v. Kappos, ___ U.S.
___, 130 S.Ct. 3218, 3231 (2010)(invention based on hedging strategy for
commodity market investments an unpatentable abstract idea). Noting that the Bilski Court termed eligibility a “threshold
test,”, 130 S.Ct. at 3225, Judge Mayer argued that the appeals court “must
first resolve the issue of whether the GraphOn patents are directed to an
unpatentable ‘abstract idea’ before proceeding to consider subordinate issues
related to obviousness and anticipation.” Thus, Mayer essentially proposed that
patent eligibility forms a quasi-jurisdictional issue to be addressed prior to
other grounds for determining patentability.

In an opinion written by Senior Circuit Judge S. Jay Plager,
the majority rejected Mayer’s position. Plager noted that the dissent’s approach
would require courts to consider eligibility in practically all cases. Although
standards for eligibility are “manageable” for some technologies, he noted,
attempts to define what constitutes an abstract idea “have been less
successful.” He observed:

Our opinions spend page after page revisiting our cases and
those of the Supreme Court, and still we continue to disagree vigorously over
what is or is not patentable subject matter. This effort to descriptively cabin
§ 101 jurisprudence is reminiscent of the oenologists trying to describe a new
wine. They have an abundance of adjectives — earthy, fruity, grassy, nutty,
tart, woody, to name just a few — but picking and choosing in a given
circumstance which ones apply and in what combination depends less on the
assumed content of the words than on the taste of the tongue pronouncing them.

MySpace, at 15 (citations omitted). Plager concluded that courts
could resolve patent challenges more efficiently and avoid the complications
arising from wrestling with unclear eligibility standards by considering other
invalidity grounds first:

Rather than taking the path the dissent urges, courts could
avoid the swamp of verbiage that is § 101 by exercising their inherent power to
control the processes of litigation, and insist that litigants initially
address patent invalidity issues in terms of the conditions of patentability
defenses as the statute provides, specifically §§ 102, 103, and 112. If that
were done in the typical patent case, litigation over the question of validity
of the patent would be concluded under these provisions, and it would be
unnecessary to enter the murky morass that is § 101 jurisprudence. This would
make patent litigation more efficient, conserve judicial resources, and bring a
degree of certainty to the interests of both patentees and their competitors in
the marketplace.

Sunday, 11 March 2012

PatLit's thanks go to Ignacio Marqués Jarque (Abogado, IP/IT Department Baker & McKenzie Barcelona, S.L.P.) for news that a still-recent and now final decision of the Court of Appeals of Madrid redefines the concept of "national divulgation" in Spanish utility model cancellation actions in accordance with the current availability of online patent databases, regardless of the language in which the prior art is divulged. He explains:

According to section 143 of the Spanish Patent Act of 11/1986, of 20 March, a registered Spanish utility model protects inventions of "less inventive status" than those protected by patents. When granted, it protects a product's specific set-up or structure from which some use or practical/technical advantage can be obtained (its aim is to protect "utility" and "practicality" in a product's manufacture or use). A Spanish utility model is protected for a period of ten years from filing, and according to Spanish law, requires "Spanish novelty" as the relevant state of the art is "everything divulged in Spain before the application date" (section 145 of the Spanish Patent Act).

In recent years, there has been a lot of contention and debate on the concept of "national divulgation" involving Spanish utility models litigation, and how this "national state of the art" is to be construed.
In its judgment, no. 330/2011, the Audiencia Provincial de Madrid - Sección 28ª (the Court of Appeals of Madrid, 28th Section) has established that online patent databases can be used as evidence of prior art for the purpose of cancelling Spanish utility models ("modelos de utilidad"), even when such prior art is divulged in languages other than Spanish.

In the reported case, the claimants relied basically on foreign patents to show and declare that the challenged Spanish utility models were not novel and did not meet the required level of inventive step.
The Court understood that the prior art brought to the case was "divulged in Spain" (as the law requires) as it was available in online free-of-charge patent databases such as the European Patent Office's Espacenet before the challenged Spanish utility models were filed. The Court found that the prior art resulting of those online databases was relevant to determine the invalidity of the later Spanish registrations.

This case is of relevance as the reported jJudgment redefines (and updates) the concept of "divulgation" in Spanish utility models cancellation actions with regard to (i) the legal relevance of foreign registrations and (ii) the availability of new sources of patent information (i.e. online databases)".

Monday, 5 March 2012

KCI Licensing Inc and others v Smith & Nephew and others was decided last Thursday by Judge Colin Birss QC, sitting as a judge in the Patents Court, England and Wales).
Following earlier litigation in which KCI had pursued Smith & Nephew (S&N) for infringing two of its European patents and established that infringement had occurred, the company applied for summary judgment in relation to an enquiry into damages. In its particulars of claim in the infringement proceedings, KCI had asserted that it was the registered patent holder. S&N admitted that assertion at the time but now, in its response to KCI's statement of intent in the enquiry into damages, S&N claimed that KCI was not the true patent owner after all.
KCI was not impressed and argued that it was surely not open to S&N to raise the issue of true ownership on the enquiry into damages -- not just because of the earlier admission but also because it in any event was estopped from doing so. No, said S&N: it had actually raised the point in its skeleton argument at the trial and the admission was only that KCI was on the register as its registered proprietor, not that KCI was its true patent owner.

In an extempore judgment which was noted briefly on the Lawtel subscription-only service, Judge Birss QC allowed KCI's application. In his view, the pleading that KCI was the registered proprietor was a plea that it was (i) the proprietor and (ii) on the register. This was quite normal, but it would not be usual to see a plea that the claimant was the "true proprietor". In any event, the burden of proof lay with S&N to disprove that KCI was the true proprietor. Having already admitted in its defence that KCI was the proprietor, an amendment to the defence was needed before the issue of true ownership to be raised. Since this issue was raised in S&N's skeleton argument at trial, it would not be right to look at the matter simply as a pleading point. However, S&N should have raised the issue when the trial judge was ordering relief following his judgment; if indeed KCI was not the true owner, it had no right to orders for relief -- and this could and should have been a ground for S&N's subsequent appeal. Once the court was considering damages or an account on an enquiry into damages, there was no longer any cause of action for patent infringement; it had been replaced by a judgment premised on KCI having title to sue. By this time it was too late for S&N to challenge KCI's right to sue.

Sunday, 4 March 2012

It's okay to have lots of bullets to fire
at the other side's patent -- but it may
cost you dearly if you use them all ...

An eye-catching decision on costs was delivered last month by the Court of Appeal, England and Wales (Lords Justices Elias and Kitchin, plus Sir Robin Jacob) in MMI Research Ltd v Cellxion Ltd and others[2012] EWCA Civ 139,23 February 2012.

In the wake of its own earlier decision this January (here, discussed by Norman Siebrasse on the IPKat here) that a patent for a method of breaking through the security system of the Global System for Mobile Communications was invalid for obviousness, the Court of Appeal had to determine the level of costs: for (i) the main trial, (ii) the trial of remitted issues, (iii) the application leading to the second trial and (iv) the appeal itself.

Giving judgment for the court, Sir Robin Jacob ruled that no order for costs should be made for the first three of those categories. Notwithstanding the fact that Cellxion was the overall winner at trial, it had only won on one issue but had raised what the court regarded as an unnecessarily large number of points in the issues on which it did not win. Not just this, but it gave evidence which the court described as "wasteful and unsatisfactory". On the excessive raising of points Sir Robin had this to say, at [9]:

While it was appropriate to deprive Cellxion of its own costs on the issue on which it won, this action was nonetheless still not so exceptional that the company should be ordered to pay any of the other side's costs. Since Cellxion's appeal on the remitted issues was close to hopeless, while it won on obviousness it should only have 70% of the costs of the appeal.

Thursday, 1 March 2012

The Enforcement of Patents is a title of natural interest to readers of the PatLit blog, though it becomes immediately apparent to anyone picking up this volume that its contents are aimed at understanding the legal, strategic and economic aspects of patent enforcement in Asia (the work actually belongs to the Max Plank Institute's Series on Asian Intellectual Property Law). While PatLit has a healthy readership (last year the blog welcomed 49,986 visitors; this year it has already received 9,515, showing a year-on-year increase of 14.96%), only 7.27% of its visitors come via websites with Asian top-level domains.

The editors of this book are Reto Hilty (Director of the Max Planck Institute for IP and Competition Law, as well as editor of the Series) and Taiwan-based scholar Kung-Chung Liu. In this work they are assisted by a strong team of contributors drawn from East and West. But what is this book about? According to publishers Wolters Kluwer:

""Obstructions to patent enforcement exist all over the world. Increasingly, unauthorized players use protected inventions to conduct their own commercial businesses. The question must be asked whether available law provides for sufficient disincentives against the infringement of granted rights. If a patent right cannot be properly enforced, it is of little value to its owner; moreover, under-enforcement ultimately leads to tension within the entire system of protection, generating harmful repercussions and sooner or later producing dysfunctional effects. Yet protection that is too wide risks hindering further innovation. Carefully balancing the scope of legal protection with the impact of enforcement measures is essential. The more the legal focus has moved to questions of enforcement, the more the imbalance within the system of legal protection has been revealed.

In 2010 an international conference was organized around these issues in Taipei by the Max Planck Institute for Intellectual Property and Competition Law and the Academia Sinica, Taipei, with the support of the IP Academy Singapore, the Institute of Law for Science and Technology of National Tsing Hua University, and the Graduate Institute of Intellectual Property, National Chengchi University. The aims were to provide doctrinal clarification of some common misconceptions and myths surrounding patent enforcement [Good idea -- but are any of these myths and misconceptions to be found in the generalisations contained in the previous paragraph? That's a good subject for a good argument in the bar, if not for a conference of its own], and to discuss the “more economic approach,” which is gaining growing acceptance across many countries.

This publication, derived from that conference, carries through those objectives, and also serves as a handbook for patent enforcement in major Asian jurisdictions, where there is huge potential for economic growth and patent cooperation [the word 'handbook' rather suggests a practical manual; this is a handy book, and a richly informative, but not a 'handbook']. In addition it looks into the experiences of the centralized system of patent enforcement in the United States, and into the European Union’s efforts to establish a truly international patent right governed by a unitary European patent court [I'm not convinced that these comparisons help, given the vast legal and cultural gulf that separates the US and EU from the way disputes are resolved in oriental societies]. Scholars, judges and practitioners were also invited to comment on the conference reports, greatly enriching the book [this feature works well: it is something that could equally well benefit other collections of conference-based papers].

Among the many matters treated in depth are the following: dysfunctional use of the patent system, such as misappropriation prior to grant, abuse of granted right; the interaction between patent enforcement and competition law; safeguarding the investor’s possibilities to obtain a return on his investments during a limited period of time; the need to challenge the industries’ contentions and the assertions of lobbying groups; widespread uncertainty about the impact of patent infringements; and absence of recognized standards on how to measure the losses of the industries concerned. The authors emphasize that issues of enforcement cannot be addressed in an isolated manner. The patent system, they show, can be improved by first understanding the unique features of certain jurisdictions that can spur reflections and mutual learning. Patent lawyers, regulators, and policymakers everywhere stand to benefit immeasurably from this richly significant book".

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